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China will remove the floor on lending rates offered by the nation’s financial institutions to try to stimulate a slowing economy. Disappointing earnings from Google Inc and Microsoft Corp. are weighing on the Nasdaq this morning. Energy markets continue their rampage higher.
Equities: We still have the 1677 level as our key pivot level for the SEP13 emini SP 500. Now, the market is above this level, trading up 2.5 pts to 1683 today, and 1684 looks like it could be a good resistance level. The market still seems very strong, even in the face of disappointing earnings from tech giants Google and Microsoft. We are honestly very surprised to see the SP 500 still up on the day with these earnings reports. However, the markets sometimes defy many investors expectations. The stock market overall might still be inching higher because of the Bernanke flip-flop. Last month, Bernanke mentioned the stimulus may be tapered as early as September, but most recently he is indicating a potential tapering in mid-2014. We are curious to see whether this week’s move high is a Bull Trap or a legitimate breakout above contract highs.
Bonds: The SEP13 US bond futures are up 25 ticks today, likely on the Google and Microsoft earnings coming in lower then forecast. We believe this market could head higher to the high 136′s, which is spike high from the beginning of this month. The MAR16 eurodollars are up 2.5 ticks to 9842. We believe if they get into the mid to high 50′s, we could see some key resistance, as this contract expires a couple of years after Bernanke has indicated the tapering process might begin.
Commodities: AUG13 gold continues to trade higher this morning, up $8.4 to $1292.60. We have a near term market profile target level of $1311, with key potential support levels of $1290 and then $1284. AUG13 crude oil is up again today before the weekend, trading up $.58 to $108.62. The morning high was $109.32, and we still believe this contract could break higher through $110. The troubles in Egypt might not go away soon, which could potentially propel the market higher. Consumers may feel the energy rally at the pump, as AUG13 RBOB gas futures are up $.0428 today to $3.15. Our next market profile target above this level is $3.18. The corn complex continues to be weak today.
Currencies: The Euro and the Pound are both up around 40 ticks today, and the USD index is down 25 ticks to 82.71. We believe the USD index might be in a quiet range trade until the next non farm payrolls # comes out next month, and then we might see a big move in either direction. With Chinese data giving ideas to the market that the economy might not be slowing down as much as previously thought, and with recent news that China will remove the floor on lending rates, we believe this could potentially have a bullish impact on the Aussie. If the Aussie can hold above $91.85, we believe it could have a short covering rally to 93.30.
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